Microsoft finishes aQuantive deal, details integration

That’s how they’re answering the phones over at aQuantive’s downtown Seattle headquarters today. The largest acquisition in Microsoft’s history is now complete, opening a new chapter in the Redmond company’s effort to catch up to Google and Yahoo in the online advertising market.

Dan DeLong / P-I

McAndrews, left, and Johnson, when they announced the acquisition in May.

Whether it succeeds remains to be seen. But in announcing the deal, Microsoft gave a more complete picture of how it will try to incorporate the different aQuantive divisions into its business.

Specifically, the company created a new unit, the Advertiser and Publisher Solutions Group, inside its Platforms & Services Division. The group will be led by Brian McAndrews, who has been aQuantive’s CEO, and it will include each of aQuantive’s three main businesses: the Avenue A/Razorfish digital ad agency; the Atlas digital advertising technologies; and Digital Performance Media, the part of the company that buys and sells ad inventory.

On the phone this morning, McAndrews explained that the new group will be in charge of building an end-to-end system for advertisers and publishers across all digital media. In contrast, the separate Online Services Business, run by Steve Berkowitz, will specifically be in charge of building Microsoft’s first-party Web properties, MSN and Windows Live.

McAndrews said he will be bringing his full leadership team from aQuantive to Microsoft intact. Satya Nadella, who oversees Microsoft’s Search & Advertising Platform Group, will also be part of McAndrews’ Advertiser and Publisher Solutions Group leadership team, and some Microsoft product planning and product management groups will also join McAndrews’ group. About 400 current Microsoft employees will join the group. Everyone will keep their current offices for now, McAndrews said.

(Update: The above accurately reflects what McAndrews said when we spoke, but a Microsoft representative clarified it this afternoon by saying that he and Nadella will both run separate groups and report individually to Kevin Johnson, Microsoft’s Platforms & Services chief. However, the executives and teams will work closely together, and some people who have been in Nadella’s group will move to McAndrews’ group.)

One question is how the Avenue A/Razorfish agency will be able to be part of Microsoft while still representing the best interests of its clients — creating campaigns, for example, that run on Google and Yahoo, not just on MSN or Windows Live. When I asked about that, McAndrews said the ad agency will have an arm’s length relationship with the rest of Microsoft.

“It’s exactly the way we did it within aQuantive,” he said, explaining that the other two aQuantive units have essentially worked as vendors to the agency. “Avenue A/Razorfish, their highest priority has always been what is right for their clients, and that will never change. The day that changes is the day they go out of business.”

No layoffs are planned. That means, with aQuantive’s 2,600 employees, Microsoft has officially crossed the 80,000 employee milestone. Many aQuantive employees are gathering at 2 p.m. in downtown Seattle for presentations by McAndrews and Johnson. Microsoft isn’t allowing reporters in.

In the meantime, those employees might want to grab some aQuantive-branded materials as memorabilia. While the individual product and unit names will remain, such as Avenue A/Razorfish and Atlas, McAndrews said the aQuantive name will eventually go away.